Reengineering and Continuous Improvement

by J. Chris White

In a complex system, relations dominate and primarily determine the success of the system.

The relationship between continuous process improvement and business process reengineering has been a heavily debated topic for some time. However, these two approaches are very similar because each aims for process improvement. They only differ in focus.
Processes and systems have parts that perform the work of the system, and relations among the parts that define how the work should be performed. For example, a business process has employees as its parts, and procedures and directives as its relations. Both parts and relations must be effective for the system to succeed in meeting its objectives. Based on systems theory, changes in a system's relations often represent the largest potential for improvement because the relations provide the structure in which the system functions.

Reengineering is the "fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measure of performance, such as cost, quality, service and speed," according to Hammer and Champy in Reengineering the Corporation. To achieve such drastic improvements, a focus on relations is necessary because, according to systems theory, relations primarily determine system performance. Thus, business process reengineering focuses on system relations. On the other hand, continuous process improvement seeks incremental improvements that are not drastic, according to Masaaki Imai in Kaizen: The Key to Japan's Competitive Success. These incremental improvements usually focus on the individual parts of a process or system.

Based on the premise that continuous process improvement and business process reengineering are both forms of process improvement that differ only in their focus, there are models and prescriptions for improvement initiatives at the end of this article.

Systems and processes: Parts and relations
There are several definitions for a system, but the most generic and practical is that a system is a group of parts or components that work together to achieve a common goal. For example, every person has many body parts that combine to form the human body and its systems, which has goals such as growth and survival. In a business organization, employees and groups work together to achieve the organization's goals, such as higher market share and technological leadership.

We can define a system's main elements as the "parts" that perform the work and the "relations" that define how the work will be accomplished. Obviously, both parts and relations are important for a system to perform adequately. For instance, imagine a basketball team as a system. The system parts are the players, and the relations are the way the players work together (i.e., their "teamwork"). Both the players and teamwork are important to the team's success. If each of the players does not understand the fundamentals of the game, such as how to dribble the ball or shoot at the basket, the team won't do well, regardless of how well the players work together. On the other hand, the team will still be unsuccessful if all players have excellent individual skills yet refuse to pass the ball or involve other players.

The same example can be applied to business systems in organizations. A business system, or process, must have skilled employees working together in an effective manner. The employees or small work groups represent the parts of the business system, and the procedures, coordination and communication among them represent the relations. When a process is not achieving the desired results, the traditional response is to encourage employees to work harder and better. This represents a focus on the system's parts.

Slogans and posters such as "Do your best!" and "We're counting on you to make a difference!" point to the individual employees as the reason why the process is yielding poor results. Many people can testify, this is a very frustrating situation to be caught in. Usually, the process is broken because of the ineffective manner in which the employees are forced to coordinate. Most employees are very limited in their power to make changes to a process or organization.

A better and more effective response to inefficient processes is to focus on the system's relations. Alter the work flow, eliminate activities, collocate personnel or make similar changes. The recent field of systems thinking emphasizes this point strongly. One of the first systems thinkers, Jay Forrester, states in his groundbreaking 1961 book, Industrial Dynamics, "We can expect that the interconnections and interactions between the components of the system will often be more important than the separate components themselves." In The Fifth Discipline, author Peter Senge builds upon this idea by stating that the leverage for change or improvement of a system is found in the structure, or relations, of the system. In systems thinking, relations themselves tend to take on their own identity.

The change continuum
Two common phrases that are often interpreted as separate approaches, business process reengineering and continuous process improvement, are actually similar in nature. Both involve change and improvement. However, the focus of each is different. Continuous process improvement primarily focuses on the parts of a system or process, while business process reengineering primarily focuses on the relations. For instance, if a company only retrained its employees (a focus on parts), it would most likely not be called business process reengineering. Conversely, if a company rearranged a process so that activities occurred differently and eliminated 50 percent of the labor (a focus on relations), it would most likely not be called continuous process improvement.

Figure 1 shows a spectrum for rates of change. At one end is status quo, which involves no change, and at the other end is reengineering, which involves drastic change. In the middle is continuous improvement, which represents minor change. Based on the systems theory that the leverage for major change is in a system's relations, drastic changes using reengineering involve changing system relations.

Models for focusing improvement efforts
At a fundamental level, if we define system complexity as a measurement of the amount of relations present in a system, we can establish a model for focusing efforts to improve a system. For instance, using the basketball team example from earlier, the team can be considered a complex system because of the many relations that exist among players. Although a basketball team's score is just the addition of all the players' scores, players influence and affect each other such that each player's score is partially a function of the system's relations. In other words, one player's score depends on the relations with other players. In a complex system, relations dominate and have a substantial affect on the system's success.

At the opposite extreme, a golf team represents a simple system because no relations exist among players. The golf team's score consists of all the players' scores, but in golf, each player does not normally influence or affect the other players. Each player's score is independent. In a simple system, the system's individual parts dominate and primarily determine the system's success.

To improve a basketball team or any other type of complex system in which the relations dominate, the focus must be primarily on the relations. Conversely, to improve a golf team or any type of simple system in which the individual parts dominate, the focus must be primarily on the individual parts. Figure 2 illustrates this model. The X in the figure represents ineffective efforts.

For complex systems, we can extend this model to incorporate business process reengineering and continuous process improvement. Figure 3 serves as a guide for improvement initiatives of complex systems in which the system is influenced by both parts and relations. Again, the X in the figure represents ineffective efforts.

For instance, consider the traditional engineering company that is organized by functions. Generally, work flows from design to planning to manufacturing. An individual within each functional area does his or her portion of the work and throws the work "over the wall" to the next step in the process. This is a complex system. Now, suppose that this process is producing unsatisfactory results. If the company were simply to improve each functional area separately, this improvement effort would be focused on the system's parts. The positive results would be minimal.

In fact, in this example, the results are often worse. As each functional area attempts to optimize its portion of the process, the total process becomes suboptimized and more confusing to those participating. However, if the company improved the process by collocating personnel from each of the separate functional areas and changing the reward program, this improvement effort would focus on the system's relations and would produce better results. Enhanced communication and team appraisals would represent new relationships among team members.

In this example, as in many process improvements, the major problems are not with the employees. The employees are simply acting in accordance with the system that they are in. They do not communicate often because they are isolated and working with different standards. In addition, the reward program may encourage individual effort as opposed to team success. The real problem lies in the system structure of separating employees who need to share critical and timely information. Change this structure, and the process will generate new results.

The models shown in figures 2 and 3 are summarized in the following bulleted lists, which also include simple prescriptions to facilitate improvement initiatives.

Focus on individual parts (i.e., employees and small work groups) of a system or process when:
Minimal improvements are desired.
Relations cannot be changed.
The system is simple and does not have many relations.

How to focus on parts:
Educate employees about the process of which they are a part.
Train the employees in the necessary skills for their activities.
Show employees their spans of control.
Ensure that all employees are receiving necessary resources.

Focus on the relations (i.e., procedures, coordination and communication) of a system or process when:
Major improvements are desired.
Improvement of individual parts has yielded minimal results.
The system is complex and dominated by relations.

How to focus on relations:
Re-evaluate process objectives.
Eliminate as much handling of the product as possible.
Eliminate buffer inventories between activities.
Establish teams that include all necessary disciplines and cross-train members.
Flowchart the process with participation from all team members.
Model the process on a computer using simulation software.

Know where to focus
Any process or system is composed of individual parts that perform the work of the system, and relations that describe how the work should be accomplished. In complex systems that contain many parts and relations, the relations typically determine the system's performance. Therefore, improvement efforts that seek drastic improvements should focus on the relations. This is typically called business process reengineering. If small improvements are desired in a complex system, then the efforts should focus on improving the system's individual parts. This is typically called continuous process improvement. If the system is simple, the only way to achieve improvement is to focus primarily on the individual parts because very few relations exist.

About the author
J. Chris White is the manager of total quality management for Serv-Air Inc., which is a division of Raytheon E-Systems, a company that specializes in aircraft maintenance and modifications, as well as information systems integration. White has recently authored two articles on the subjects of systems theory and process simulation, and is contributing to the book Strategic Quality Management.